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It’s good to be back here again this year, just as we were last year. And I hope and look forward to maybe doing this again as we continue to try to find ways of working together.
Just a few words about last night, the State of the Union. As I suspect most of you at least saw, the very, very strong emphasis, very strong theme on what the President called middle-class economics, talking about – you know, not that everyone has exactly the same experience, but overall a year that was pretty good in terms of the economy and really showing some good kick at the end as well. As the President said, more private-sector job creation than all the rest of the advanced economies combined in the world. And ways to go, we understand, but really, really quite encouraging. And I – and I hope in your cities you’re also seeing that pickup coming along across the board.
In terms of energy specifically, if we just go back to our chat last year, again, the changes have been pretty profound. Certainly I guess the headline is around the oil price. At the time, I think last year when we met, it was about $110. Today we’re more in kind of the $45 range. It does create some strains but, you know, number one, for consumers, obviously, it’s just a huge, huge benefit. And consumers includes a lot of small business, a lot of big businesses, frankly, also with substantial energy costs. So that’s really quite something.
And certainly at the gasoline pump we are getting pretty close to $2 a gallon national average and many – more than half the states, I think, already below that. But we are expecting the national average to get below $2 probably within a month or so the way – the way trends are going.
Natural gas prices continue to be low, I haven’t checked today, but as of yesterday at least around ($)2.80. And again, for a lot of home heating consumers, not to mention manufacturing, as you well know, a major – a major advantage.
This is a copy of “Revolution Now” on our website. I think I talked about this last year, but now this is updated. So every fall we are updating this. And it tells an increasingly good story about how the costs of, in this case wind – onshore wind, PV, LEDs and transportation batteries just continue to fall, and despite some of the vagaries around tax incentives and the like, by and large certainly deployment continuing to rise. And we remain pretty bullish about the future of these – of these technologies.
I’ll be returning to some of these in a bit more detail, but Ijust I’m just going to leave these copies here, so you can be responsible for the distribution.
But again, it’s available easily on our website.
Energy efficiency has also continued to make gains. In fact, I think last year I talked about our commitment as part of the Climate Action Plan, but our commitment in 2014 to really pick up the pace on appliance efficiency standards. And this past year we did that, each with a cost-benefit analysis and positive return.
Last year, we, with I think nearly two hours to spare on December 31st, held to our commitment to get 10 of these appliance standards through last year, which was actually twice as many as had been done in the preceding two years. So it was a factor of four in terms of the rate. It leads me to think that setting new and updating old efficiency standards continues to be something that just makes a lot of sense.
And we are holding ourselves to an even higher standard in 2015. But we are projecting that the efficiency standards that will have been put into place in the Obama Administration through to the end, cumulatively to 2030, will be about a 3-gigaton CO2 avoidance and about a $450 billion of energy cost avoidance to consumers and businesses.
So these are big numbers. When you’re working on microwave standby power, you kind of don’t get the idea that these things really add up. But when you start talking about 50, 60 standards over this time period, they do – they do add up quite a lot. So, the last year has been a busy one, and I think with a lot of good news on this front.
As I already mentioned, the “Revolution Now” document talks about, again, the continued cost reduction in those technologies and deployment gains. I will come back to the climate discussion, which of course the President alluded to several times yesterday in his remarks, and where we are going in 2050 with that.
But starting with these “Revolution Now” technologies, as I mentioned, one of them was LED lighting. We see tremendous progress made in the very, very short payback periods, and certainly lifetime major savings with LEDs. I just mention that because this is also, as many of you know, certainly coming on strong in terms of outdoor lighting. And one of our programs, the Better Buildings Outdoor Lighting Accelerators, is working with cities and states to help transition to LED outdoor lighting.
One of the cities that we’ve worked with on this is Detroit, and we are moving over a three-year period –I believe it’s a three-year period – to a complete network of outdoor LED lighting. It’ll save operating expenses, about a million-and-a-half dollars a year in lighting. But what’s also been interesting is that the mayor pointed out he police force has been such a strong supporter of the deployment of the LED lighting for public safety reasons.
In June, I was in Dartmouth, Massachusetts, southeastern Massachusetts. One person here knows where that is, next door to New Bedford, and not quite the size of Detroit. But you go now to a small town and it’s, again, complete, gone to 100 percent LED lighting. So it’s great to see this now happening in cities of all sizes and in many geographies. And that’s something that we remain very, very, very committed to.
Continuing the Detroit story, another one is we are working closely with the Detroit Red Wings, who are building a new rink, a new stadium as part of a bigger kind of redevelopment activity. We’re working very closely with them in terms of the energy efficiency approach. And I must say that, in general, with a number of teams, the NHL is really taking strong steps. NASCAR is taking strong steps. The NFL, more at the individual team level at the moment, taking some strong steps. So a lot of the sports franchises, obviously generally in urban areas, really moving forward on this as well.
And I must say, in terms of hockey, I did have the pleasure on New Year’s Day of going to the Winter Classic, which was here in D.C. The Bruins weren’t playing, but the Caps won with less than 13 seconds left, and that’s quite a game. But of course, now I’m pushing Commissioner Bettman, et cetera, that – the lighting, which is great. Now we have to get to the HFCs in the refrigeration. That’s going to be a little bit more of a challenge, but another place that the NHL is thinking about heading to.
So that’s one – so one story is that one. And again, if there are other opportunities of this type in your cities, we love to kind of work together. We know many of you are advancing those kinds of issues.
A second thing I’d like to give an update on, because we are very close to issuing the first installment, the Quadrennial Energy Review. Again, I think I mentioned this last year in our discussions. It was called for in The President’s Climate Action Plan in June 2013. It got off the ground in a serious way in January with a Presidential memo. And the idea is that we are bringing together the equities and the perspectives and the needs of agencies across the government in energy.
But this first year has been focused on infrastructure – transmission, storage and distribution of energy. Now, some of that, of course, let’s say in the electricity arena, involves, you know, high-voltage, long-scale transmission. But it also involves, of course, getting down into distribution systems, distributor generation. I can’t kind of go into what our conclusions are at the moment, but we should be coming out with this in about a month, roughly speaking.
But also looking at what is a problem in many of our urban areas, very old gas distribution systems. And these gas distribution systems are responsible for something like 20 percent of methane emissions, although I have to say the data aren’t exactly fully nailed down. This is an area, for example, where you may have seen the Administration issued a methane strategy overall last – in the last summer. Recently the EPA announced some approaches on the methane reduction end. But at Department of Energy, including through a series of five roundtables, we have been focused more on the transmission and distribution systems, and we feel it’s very important to move forward.
Many of you – in many of your cities, you have this challenge in terms of very old distribution systems –and I know it’s an expensive proposition. The estimate is to replace the gas distribution systems across the country is like a $270 billion bill. We have systems that are as much as a hundred years old – you know, cast iron pipe. These are safety issues as well as methane-emission issues. So we are going to be addressing these kinds of issues, as well as the more commonly discussed big supply issues, et cetera. So we think that these infrastructure questions are very important.
We have also, in that work over the last year, focused very heavily on resiliency. Certainly for coastal cities we’ve done work in terms of storm surges and the like and what what will be anticipated going forward, but resiliency more generally. For example, one of our projects in New Jersey on resiliency was to build up a very substantial so-called microgrid – I think the word “micro” doesn’t really apply when it’s, like, 50 megawatts of distributed generation, but let’s call it a microgrid for the usual terminology. The idea is that this would provide resiliency, in that case against things like what happened with Sandy, in terms of making sure that a critical electrified transportation corridor remains active even under extreme events.
So we will be addressing our resiliency in that Quadrennial Energy Review. There’ll be much more.
I would also mention one of the things that was, frankly, a bit more eye-opening for us and often intersects certainly urban issues or urban concerns is what we call shared infrastructures – the infrastructures that are not specifically energy infrastructures, like wires and pipes, but the infrastructures like, well, road, rail, inland waterways, ports, interconnectors from ports, all those areas that are pretty heavily stressed in many, many places. And again, I know many of you know that up close and personal. And the question is, what can we do to move forward?
Those are not DOE responsibilities, you know, inland waterways, et cetera. But again, this is a government-wide look, so the Corps of Engineers, the Department of Transportation, et cetera, are all involved in this area. And so these are areas that we are going to be addressing in this QER. And you all know about the various grades that we get for infrastructure from the, you know, Society of Civil Engineers. They would not get you into college if you got those grades in high school.
Another area I’ll just mention, in terms of our progress since we last met, certainly on the manufacturing front we remain very active – in our case, obviously, at the Department of Energy, for energy-related manufacturing. Once again, another – an area of a lot of good news, something like 800,000 manufacturing jobs coming to the country since we got out of the recession six or so years ago, and a good fraction of that in the auto industry, but certainly more distributed than that.
One of the things that the Department of Energy has done along these lines in the last year was to move forward with two manufacturing hubs. One is in Charlotte and one Knoxville. The first on wideband gap semiconductors, which has many, many applications in the energy technology area and others as well; and then the more recent one in Tennessee on manufacturing of composite materials, which would come into wind blades, autos, other important technologies.
So these are efforts committed to for at least five years. We put in $70 million each over those five years, but the states and regions, et cetera, have put in significantly more than that to each one. So, for example, the one in Tennessee, as I recall, put in $150 million in addition to our 70 (million dollars). So these are big efforts.
They will all include training components in them. That, in turn, links to things like the President’s community college initiative, as you certainly are aware of that major proposal going forward. And so we are linking these kinds of manufacturing initiatives, alternate training programs with community colleges.
One, which also happens to be in Tennessee but was not connected to the recent hub, is the earlier cosponsor to the Department of Defense, a 3-D printing hub in Ohio. And we have a manufacturing – a 3-D manufacturing demonstration facility at our Oak Ridge Laboratory. They have partnered with a community college, Pellissippi, in terms of certificate of degree programs in 3-D printing, with access to our demonstration facilities. So trying to build this workforce for energy is a big, big focus of ours, and again, very much integrated with the President’s larger initiative in terms of community colleges.
And by the way, I forgot to say, if I go back to that question of the natural gas distribution infrastructure in urban environments, and our hopes to be able to help accelerate some of that replacement, again, for both safety and climate reasons, I should have said that the anticipation is we’re talking about, like, 85,000 construction jobs that we have under our program. So this is not – this is not small. So it’s a big deal.
On the community colleges and colleges, I will just mention one last effort that we announced last Thursday with a consortium of 13 HBCUs, and that was we provided $25 million to establish a program on developing cybersecurity professionals. A cybersecurity workforce is highly desired, shall we say. The jobs are growing just incredibly fast, and we can’t keep up. And certainly in the Department of Energy, we have three major reasons for needing cybersecurity professionals. One is, just like any big organization, you know, personal information, financial information needs to be protected. Secondly, we have a large national security responsibility with lots of national security information to protect. And third, we work with the private sector, with utilities, in terms of protecting the grid against cyberattacks.
We can’t go into detail, but you all know this is – these attacks are growing in volume and in sophistication very, very dramatically. It’s not an area where you can stand still; constantly got to be ahead of the black hats. And so, again, we are looking at a whole variety of job-training programs. And these are focused, again, in colleges, but also in community colleges, which would be in many of your – of your communities.
So I think I will just end by turning to climate. Again, the President last night mentioned the climate challenge. In many cases, the issues of resilience that I mentioned earlier are related to climate in the sense of the anticipated increase in extreme weather that we will see as this – as one of the risks. But of course, a major part is also on the mitigation side – moving to clean energy, moving to energy efficiency. And there this is a critical year, in our view.
As you all know, the meeting in Paris in December is viewed as kind of the critical opportunity for international engagement in addressing climate. The President and President Xi of China in October – again, I’m sure as you all know – made an announcement that really was very, very significant in terms of really eliciting the first commitment by China to its responsibility for addressing carbon emissions, for taking on a pretty aggressive goal for non-fossil energy by 2030. That commitment has, in turn, changed the international dialogue in a very, very substantial way, whether it’s domestically or internationally. The argument that China isn’t doing anything no longer works. So I can’t say how it will turn out, but we’re going to be working very, very hard this year to go to Paris with ambition and the intent to come away with a real uplifted international commitment.
Clearly, cities are critical. Mayors have been very, very much in the lead, as you all know. We’re very grateful for that. And in this year, again, the opportunity to work more together in this direction would be much, much appreciated. In fact, I should have said, in the China agreement as well, one part which, frankly, still needs to be developed much more was a focus on cities and city-to-city relationships. And so that really is a very, very crucial, crucial part of the approach.
So I think those are just some random remarks. And I’d be happy to spend a little time with some questions.